Stephen Dorrell: The former health secretary arranged for friends to buy the flat so he could rent it back from them

A Senior Tory MP who is investigating the care system sold his flat to the owners of a chain of nursing homes and now rents it back at taxpayers’ expense, it was reported last night.

Stephen Dorrell, chairman of the health select committee, made a profit of £70,000 from the secret deal.

The former health secretary arranged for his friends Linton and Denise Connell to buy the flat two years ago so he could rent it back from them.

Last night he said he would be declaring the deal to fellow MPs on the health committee, which started its inquiry into social care in June.

Mr and Mrs Connell are directors of St Cloud Care, which runs homes in Worcestershire providing care for 300 people.

Labour MP John Mann said Mr Dorrell should consider his position as chairman, adding: ‘[His committee] will want to know what is going on. This raises questions about his independence. He needs to demonstrate that he has no links, personal or professional, to these landlords.’

A spokesman for the Independent Parliamentary Standards Authority said that it appeared no rules had been broken because MPs are only banned from renting from family members and companies in which they have an interest.

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Information released by IPSA shows that
Mr Dorrell is renting a second home from Linton and Denise Connell in
central London, paying the pair £17,033 in 2011/12, which works out at
£1,400 a month.

The MP, who is currently on a visit to Scandinavia, told the Daily Telegraph he had lived at the one-bedroom flat in Westminster for 33 years, initially renting it from his family before buying it in 2007.

After buying it, he claimed for the interest on his mortgage for three years until 2010 when he arranged for the Connells to buy the property after new rules banned MPs from claiming mortgage interest.

Land registry records show Mr Dorrell bought the flat, which is in a mansion block, for £280,000. He sold it to the Connells for £350,000.

Mr Dorrell said he had not declared the
relationship in the register of members’ interests because he was not
deriving any financial benefit from the arrangement.

'Questions': Mr Dorrell said there was no financial interest because he was paying an 'arm's length' rent for the property

The MP said he had lived in the one-bedroom flat in Westminster for 33 years, initially renting it from his family before buying it in 2007, then selling it to the Connells in 2010

He said he
was 'perfectly happy to explain it to the committee, there is no
financial interest because it’s an arm’s-length rent.'

'This is a
flat that I occupied for 33 years and at one stage was owned by my
family – because when I got into the House of Commons you were not
allowed to have a mortgage, so I rented from them,' he said.

'Then
I bought it on an interest only mortgage, because that was the rule at
the time, and that ended. So I arranged for a third party to buy it. We
had an independent assessment of the rent and it is rented at arms
length.'

Some of St Cloud's six homes were criticised by the Care Quality Commission during inspections in September.

The
CQC said of Holmwood care centre in Kidderminster that 'improvements'
were required in three areas, including 'standards of caring for people
safely and protecting them from harm'.